Not having insurance coverage when a disaster strikes will be more costly than people think

14 years after the devastation caused by Hurricane Ivan on 7 September 2004, statistics show that 7 out of 10 homes are not insured.

Managing Director of Netherlands Insurance, Richard Strachan indicated that since the hurricane, homes insured have doubled from 15 to 30%, but despite the increase, a number of homes are still not insured against any form of disaster.

“When Hurricane Ivan hit us 49 years after the first one hit us, which was Janet, unfortunately only about 15% of homes were insured. That was a very low percentage, and probably so because most own their homes outright, meaning that they didn’t have a mortgage and weren’t required by agreement to have insurance. But after Ivan, of course, that percentage improved significantly, and you ended up with about 30% of homes insured; but with 30% insured, it still means that 7 out of 10 homes are still not insured.”

Some may consider Homeowners Insurance to be expensive, but Strachan said not having insurance coverage when a disaster strikes will be more costly than people think. He advises homeowners to get insurance coverage that fits their needs. “One of the important things, when you are getting this type of insurance, is that you insure for as much as possible. Insure everything that you own and insure your home against as many perils as you possibly can because no matter how expensive you think insurance is — and it isn’t really, it’s just another cost to living! — but no matter the cost, try not having it and you will see how expensive that process is when you have lost your life savings.”

With regards to homeowners with insurance, Strachan says one of the common mistakes that many homeowners make is not having sufficient insurance.

“Coming out of something like Hurricane Ivan, the biggest mistake that people discover is that they are underinsured since they have not insured sufficiently for the real value of their property, whether it be their building or their contents. In terms of building insurance, what a lot of homeowners don’t realise or don’t always recognise is that the cost of construction, because of inflation, will go up. So, if you don’t keep adding inflation to your insured value, then you will find 10 to 20 years down the line that you are underinsured.”

He noted that homeowners must also take into consideration the value of their contents when securing insurance. “There is another type of underinsurance, in terms of content. Most people underestimate the value of their content, because content, unlike your home, is something you build up gradually. Sadly the average homeowner doesn’t realise the number of contents they have until they have lost it, so the general rule of thumb as far as content is concerned is 25 to 40% of the building value. So if your home is valued at $100,000 as much as $25,000 will be content and it can go as high as $40,000 dependent on what you have.”

The National Disaster Management Agency (NaDMA) continues to sensitise people on the need for comprehensive disaster planning for any natural disaster or manmade hazard. National Disaster Coordinator, Sylvan McIntyre said the agency will remain proactive by reminding people of the importance of disaster preparedness.

“The challenge for us at NaDMA is to let people know that things can happen at any time and while we prepare for a hurricane, an earthquake can happen or a volcano can erupt. So people must be conscious of all of that. We are conscious of that reality and we will give information as often and as regular as possible so that people do not become complacent.”